Asia BrokerDealers Ramp Up For More ETFs

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Brokerdealer.com blog update profiles brokerdealers’ push for a more diversified market in Hong Kong. In an effort to listen to the brokerdealers and diversify the market, Hong Kong’s Securities & Futures Commission is looking into allowing more off shore ETFs. An extract from AsianInvestor article, “SFC mulls more foreign ETF listings in HK” tells us more.

Hong Kong’s Securities & Futures Commission (SFC) is considering allowing more offshore ETFs, including from the US to be cross-listed in Hong Kong.

The move comes amid calls by some industry players from Hong Kong to diversify its ETF business, because the product range at present is predominantly Greater-China focused.

A senior executive in the ETF business told AsisanInvestor that the SFC that set up a working group to look into expanding the scope of the ETF industry and further developing int. It reached out to individual fund managers towards the end of last year to solicit interest on cross-listing their offshore ETFs in Hong Kong.

The senior executive said their group was interested in listing its American ETF in Hong Kong, but the decision hinges on the SFC and will involve a change in regulatory policy.

To read the full article from AsianInvestor, click here.

Hong Kong Exchange Opens Doors to Islamic-bonds with First Sharia-Compliant Debt Issue

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Brokerdealer.com blog update courtesy of multiple news sources.

Islamic-Finance-CoverHong Kong has raised $1bn in its introduction Islamic bond issue, the city’s latest move to expand its markets amid increased competition from rival financial centres. Local brokerdealers indicated this portends a boom in the market for the issuance of sharia-compliant debt securities.

The HongKong sukuk issue is the very first by a AAA-rated government, and was sold to Asia-based investors while a third went to Middle Eastern funds.

By pricing the five-year sukuk at merely 23 basis points Hong Kong also achieved the lowest spread to get a US dollar bond in Asia excluding Japan.

“Hong Kong has seen a way to step in and fill a gap in the marketplace,” said Karby Leggett, head of capital markets for Greater China and northeast Asia at Standard Chartered. “With this issue, they have . . . Demonstrated this market works.” Many of the leading Asia market broker-dealers can be sourced using the brokerdealer.com global database

Sharia-compliant bonds – which call for debt to be able to provide a return structured – are a fast-growing region. So far this season, $28.4bn has been raised through sukuks, according to Dealogic, a 30 per cent increase on the same period in 2013.

The UK became the very first western nation to issue a sukuk earlier this year, while South Africa and Luxembourg are both poised to follow suit. Goldman Sachs has additionally revived its own sukuk plans, which will make it just the third international bank to issue Islamic-compliant debt, following in the footsteps of Nomura and HSBC.

John Tsang, Hong Kong’s financial secretary, said the successful sukuk sale was evidence the city was now a “viable option” for Islamic law-compliant fundraising.Hong Kong has been looking in a variety of steps to improve the competitiveness of its own markets and bring business from elsewhere in the region.

In July, the Securities and Futures Commission, the market regulator in Hong Kong, announced plans to pass the city’s rules governing real estate investment trusts, or Reits.In spite of a lengthy history as a financial centre for the region’s property firms, several high profile Reits have chosen to list in the past couple of years, which many analysts blamed on a Reit code that was aged in Singapore.

Hong Kong Exchanges & Clearing, the bourse operator, is also investigating a revamp of its own rules to attract more equity listings. Last month it published a 108-page document putting forward various suggestions – such as double-class shares, which are banned under existing regulation.

The move followed Alibaba’s choice to take its listing – poised to be among the largest to date – to ny after Hong Kong rejected its proposed management arrangement. Hong Kong has raised $1bn in its introduction Islamic bond issue, the city’s latest move to expand its markets amid increased competition from rival financial centres.